Money & Banking

E-mandate processing: RBI gives banks 6-month breather to comply with framework

Our Bureau Mumbai | Updated on March 31, 2021

The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.

The Reserve Bank of India (RBI) on Wednesday gave Banks and payment aggregators a six-month breather by extending the timeline to comply with the "framework for processing e-mandates on recurring online transactions" till September 30, 2021.

Without this breather, millions of e-mandates set up by customers could have failed from April 1, 2021 as many banks have not upgraded capacities to comply with RBI’s requirements for enabling registering, tracking, modification, and withdrawal of e-mandates.

In fact, Banks had sent out a communication to their customers asking them to make alternative arrangements for recurring transactions for utilities and bill payments, such as registering the biller on the internet or mobile banking.

On non-compliance

While extending the timeline for processing recurring online transactions, the central bank underscored that non-compliance is noted with grave concern and dealt with separately.

“The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline.

“Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action,” RBI warned.

The Internet And Mobile Association of India (IAMAI), in a recent letter to the Niti Aayog, observed that the users should bear the cost of non-adherence to the RBI's e-mandate circulars by the issuer banks, merchants and the non-bank entities, for no fault of theirs, resulting in huge business losses and significant disruptions to services to the consumers.

In August 2019, RBI had issued the framework for processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions.

In the interest of customer convenience and safety in the use of recurring online payments, the framework mandated use of Additional Factor of Authentication (AFA) during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹2,000, since enhanced to ₹5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc.

Customer protection

The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.

“Based on a request from Indian Banks’ Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, Reserve Bank had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021.

“Thus, adequate time was given to the stakeholders to comply with the framework,” RBI said in a statement.

Published on March 31, 2021

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